23/04/2015

life: what you need to know about the help to buy scheme

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Make a house a home

 

To many, buying a house is a huge achievement. But equally something I thought would just happen. You know, when I got into my late 20s, everything would just fall into place. As I crept closer to 27, which I turn this Friday, I was realising this wasn’t really the case – especially being self-employed and not earning a great deal. With at least 10% of the property price required to start things off, not to mention the monthly income to secure a mortgage, my boyfriend and I were wondering how this would ever happen.

 

To cut a long story short, once we decided our priority was to get our own place, I picked up some work in a local school which meant we had two incomes, albeit not anything huge, but enough to look average in a mortgage lenders eyes. Saying that, we certainly didn’t have enough income to pluck tens of thousands of pounds out of our derrieres to lay down so we agreed to apply for the government’s Help To Buy Scheme. The scheme has two pathways – the 5% deposit, which means you lay 5% down, the government lay 25% for you (which you slowly pay back) and you get a mortgage on the rest. The other, of which we opted for, is the Shared Ownership scheme, which I found little information on people’s experiences when we were researching which is why I wanted to write this today.

 

Shared Ownership is when you buy a percentage of your (new build) property, and continue to rent the other percentage from a housing association. In time, you can ‘staircase’, which is when you buy more shares of your property but this is totally optional. We tried to keep things simple and purchased (with a deposit and mortgage) 50% of our 2 bedroom house. This means we pay half mortgage and half rent each month – although it doesn’t work out quite like that as your rent is severely reduced to keep things feasible alongside mortgage rates.

 

We applied in December 2014 on a whim – we decided we had enough money to lay a small deposit and just took the plunge. Our deposit was 5% of the percentage we were buying, so effectively 2.5% of the houses full price. At first we struggled to know who to approach to apply, and admittedly this bit is a bit of a minefield. We got lucky and happened to see our housing association (the middle men between the developers and the customers) advertising Shared Ownership properties in the local area on RightMove. This seems pretty unusual practice though and it might take some work to find out who is offering these schemes – it’s pretty popular and all seems a little hush hush at times. Once we applied, we found out less than a month later that we were in the running for the next phase of builds, and a week later found out we were getting a property. Around two weeks after that, they told us which plot we were going to be having, which was when it was time to start all the legal proceedings. This part is pretty simple in that you go about it in exactly the same way you would if you were buying a house on the open market. My only advise would be to find a financial advisor and solicitor who are au fait with Shared Ownership as they’ll have the necessary experience.

 

From there, it’s been pretty plain sailing and we secured our mortgage with a lender known for accepting Shared Ownership applications – for reference, we’re with Newbury Building Society but Leeds are also a choice for SO. Because we were only getting a mortgage on 45% of the house, we didn’t need such big salaries to cover the cost of a 90%+ mortgage, which again is ideal if you don’t earn a great deal. The general rule is they’ll lend you roughly three times your income, so this was spot on for us.

 

The house was completed at the end of March and the move in was seamless! As 99% of SO properties are new build, it’s lovely and fresh – and clean! Oh so clean. We have our housing association on hand if we have any maintenance problems, but we have responsibility for the house just like proper homeowners. We’re allowed pets, we just have to let them know what we have and when, and we can decorate however we want. We can’t make any structural changes without their consent but I think it’s a pretty great deal seeing as they do own half of the house.

 

At first, Shared Ownership and the Help To Buy scheme seemed really daunting to me but overall we’ve had a positive experience that I’ve learnt a lot from. I couldn’t find anything like this post when we were researching so I hope it helps some of you who are trying to get on the ladder. When we move, we get a clean 50% of the property and anything it’s made which is fairly simple and with any luck will facilitate us moving to a property which is 100% ours. At the moment we’re still finding our feet and getting this right, but I’ll be blogging more about the interior when we get to where we want to be! In the meantime, there are snippets on my Instagram which you can find here!

 

I’d love to hear your experiences of buying a property or the Help To Buy scheme?

Tell me more about Katherine-Louise

If you’ve landed here, you’re probably looking to find out more about Katherine-Louise. Run by me, Kat - put simply I'm a 30 year old who is decidedly normal. My blog is a destination for women just like me - the same interests and aspirations, working our way through the same twists and turns of life. Katherine-Louise is designed to inspire and inform; to give you a break from the norm as well identify with the beauty of routine. A fifteen minute recoup, or an hours vacation, it’s the go-to for Everyday-Joe’s, just like me, who want a few minutes off the radar.